On Friday, DA Davidson increased its stock price target on GMS Inc . (NYSE: NYSE:GMS) to $105.00, up from a previous $95.00, while reiterating a Buy rating on the stock. This adjustment follows GMS's recent quarterly performance, where the company reported adjusted EBITDA that exceeded the higher end of its guidance.
GMS's stock experienced a slight decline on Friday, even though the company delivered what was considered by DA Davidson as a solid quarter. The firm's analysts highlighted that the midpoint of GMS's forecast for fourth-quarter fiscal year 2024 adjusted EBITDA is 5% higher than the consensus.
The projection is bolstered by expectations of a low single-digit percentage (LSD %) sequential improvement in wallboard prices, indicating effective implementation of manufacturer price increases.
The upward revision in the price target also factors in the implications of the Kamco acquisition. The deal is expected to contribute positively to GMS's financials, prompting DA Davidson to raise its adjusted EBITDA forecast for fiscal year 2025 by 9%. The new price target of $105 represents a multiple of 7 to 8 times the firm's adjusted EBITDA estimates for fiscal years 2025 and 2026.
DA Davidson's continued Buy rating on GMS Inc. signals confidence in the company's ability to perform well in the market, with the revised price target suggesting potential for shareholder value growth. The firm's analysis indicates a favorable outlook for GMS, underpinned by strong financial guidance and strategic business developments.
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